Sabre knows it isn't unique in facing a threat from Internet competitors or cost-cutting airlines. And neither is its technology-driven response--Amadeus, Galileo, and Worldspan are likewise replacing their legacy mainframe systems with more-flexible open architectures, all of which embrace an XML standard for exchanging data that's being refined by the Open Travel Alliance, an industry consortium.
At the same time that more-open technology standards provide the opportunities for strategic change, the legal environment is shifting as well. Since the mid-1980s, global distribution systems such as Sabre have been subject to U.S. Department of Transportation rules that have kept them from negotiating with airlines to favor one over another in organizing their listings. The rules were intended primarily to level the competitive playing field and prevent distribution systems from favoring airlines that held stakes in them. But after much debate, the department agreed late last year to lift the rules, and as of July 31 the last remaining restrictions will be gone, creating a more wide-open competitive landscape for the distribution systems.
This opening of information systems and regulation has made the question of who is partner, customer, or competitor increasingly tangled.
Take Hilton Hotels Corp. The chain, which includes the Hilton and Hampton Inn brands, books one out of every five of its hotel rooms through a distribution platform such as Sabre, since corporate travel agencies use such platforms as their primary tool. Sabre is developing something called e-Hotels, a Web-based hotel-booking service that promises to deliver richer content to travel agencies. It's exactly the kind of tool that Sabre expects will be most effective when offered as an easily customizable component of a service-oriented architecture.
To Bala Subramanian, senior VP of electronic distribution for Hilton Hotels, e-Hotels also looks like a potential competitive threat. He expects Sabre eventually to turn that high-powered Web tool into a means of selling directly to consumers. That would position Sabre as trying to seize sales that Hilton would like to have--at a lower cost--directly through its Hilton.com site. "As distribution companies assume the position that it's their customer, then my view is that, over time, we'll have a situation of conflict that comes up," he says.
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